A ‘Difficult Quarter’ For Entravision, Softened By Digital

0

LOS ANGELES — Entravision Communications reported its Q1 2018 financial results after Tuesday’s Closing Bell, and Chairman/CEO Walter Ulloa remarked during his company’s quarterly earnings call that the results were in line in expectations.


That’s largely thanks, once again, to its fast-growing digital division. In the quarter, digital revenues were higher than those for Entravision’s radio stations. TV industry net revenue, still the No. 1 driver for the company, also slumped.

“This was a difficult quarter,” Ulloa said, adding that its radio and TV divisions are seeing “significant operating headwinds.”

This resulted in “necessary steps” taken to remove $8 million in expenditures from Entravision’s business during the second quarter.

This was Ulloa’s way of addressing a series of layoffs seen across multiple Entravision markets in early April.

With $298.5 million and $248 million in cash, Entravision has some work to do at its radio and TV arms.

At TV, net revenue fell 9%, to $34.5 million, as operating expenses increased by 7%, to $21.5 million.

Ulloa noted that advertising at its TV stations was led by retail, up 7%, and by travel and leisure, up 12%.

But, automotive dollars are very soft (down 12% in Q1), and will continue to be as the category is pacing down 6% in Q2, Ulloa said. In fact, three of top 10 ad categories for Entravision’s TV were particularly soft, he added.

The mid-2017 loss of the Telemundo affiliation of a TV station in San Diego, Tijuana-licensed XHAS-33, was a factor. With a shift to Azteca América programming, a dip in ad revenue was seen. This is still an issue, and as a result Q2 pacings for TV are down 9%.

Factoring in the loss of XHAS-3, they’re still down, however, at 2%.

For Entravision’s radio segment, the story is hardly better. Radio revenue declined by 10%, to $14.1 million. But, operating expenses were sliced by 3%, to $15.3 million.

The shining star of Entravision’s three divisions is clearly Digital, where net revenue soared 347%, to $18.2 million from $4.08 million. Increases in the digital media segment are attributable to the acquisition of Headway.

That said, Digital operating expenses were also up big time — rising 218%, to $7.53 million.

The bottom line: Entravision’s total net revenue improved by 16%, to $66.84 million, as the company swung to a net loss of $1.81 million (2 cents) from net income of $2.62 million (3 cents). Consolidated adjusted EBITDA tumbled by 45%, to $6.94 million. Free cash flow sank by 78%, to $1.6 million.

Where does Entravision go from here?

“We continued to build our digital footprint, while undertaking an extensive review of our business in order to more efficiently align operations and reduce costs,” Ulloa noted.

For investors, they will be pleased to know that Entravision’s Board of Directors has approved a quarterly cash dividend to shareholders of $0.05 per share, in an aggregate amount of approximately $4.5 million.

The quarterly dividend will be payable on June 29 to shareholders of record as of the close of business on June 14, and the common stock will trade ex-dividend on June 13.

The dividend announcement comes as Entravision’s board also approved the extension of a share repurchase program announced in August 2017 with a repurchase authorization of up to an additional $15 million of the company’s common stock, for a total repurchase authorization of up to $30 million.

RBR+TVBR